EMPLOYEE BENEFIT PROGRAM

1.Why might an employee who receives a lump sum distribution from a qualified retirement plan choose to roll over the distribution into an IRA? What are the negative tax consequences of doing so?

2. Understanding Treasury Revenue Ruling 60-31 is essential to the proper planning of compensation arrangements that will defer income over time. Identify three principles outlined in this ruling that must be considered to avoid constructive receipt problems in a compensation arrangement.

3. An unfunded deferred compensation agreement generally is secured only by the promise of the employer to satisfy its future obligation to the employee. Identify the major requirement for a deferred compensation agreement to qualify as unfunded for income tax purposes and state why this requirement is important.